What do people think about income inequality?

[PoliSciStudent]

Greetings, all! I'm new here and hope that I will not offend anyone by confessing at the outset that my personal political leanings are probably farther to the left than is the norm in this forum, but I promise, I'm not here to be disruptive or disrespectful of anyone.

I am a graduate student in political science and would honestly like to hear the views of conservative thinkers on a point which has been troubling me with respect to the direction our country is heading, namely the widening gap between rich people and poor people.

According to the US Treasury Department, the richest 2% of the country own 80% of the wealth in the US. That's honestly not just some liberal's opinion, that's really true, you can check the statistics yourself if you don't belive me. Flip that around and that means that the remaining 98% of us have only 20% to go around amongst all the rest of us. In the last three years, the income of the wealthiest .001% has increased by 600%, in other words, for every $10 million/year they were making before, they're now making $60 million/year.

I read in another article that 5 of the 12 wealthiest individuals on earth are from the Walton family which owns Wal-Mart. At the same time, human resources staff for Wal-Mart, when they hire a new employee, will routinely complete paperwork for new hires to receive foodstamps, as the wages they pay their workers are so low that, even as full-time employees, they are assured of falling below the poverty level and qualifying for foodstamps, without which they wouldn't even be able to afford to feed their families.

Does this sort of thing not bother conservatives? I've read studies which suggest that Americans by and large don't mind extremes of personal wealth as, this being the land of opportunity, we harbor some hope of one day rising to those lofty summits of affluence ourselves, so don't feel we should judge others for achieving that to which we ourselves aspire. Does that sound about right to you all? Anyone have any thoughts?

[MarkL]

Those desiring to spread the wealth by making everyone "equal" are nothing more than socialists. By nature, Socialism does nothing but reward those who have grasped power, while fostering an environment in which there is no hope, no reward, and no incentive for doing groundbreaking work to move the society and economy forward.

I had a personal run in with socialism... I lived in a fraternatiy house, and there was a vote that we'd all contribute funds to the kitchen, so they could buy in bulk, and it would be cheaper than each of us buying our own food. For instance, instead of having 6 containers of milk in the fridge, there would be just 2 or 3 gallon jugs of milk... Instead of lots of jars of condiments, there would be some "giant, economy size" containers. Everything would be good with the world! It would be a "team building experience," they said...

Well, what I learned was that I was paying almost the same amount of money to the "fund" that I spent myself, but the quantity simply wasn't anywhere near what I had before, we were constantly out of milk and miracle whip, and they constantly made food that I simply didn't like (although I have to say, that one day then did bring in some boxes of Quisp cereal, which was something I loved as a child!).

Typical socialist experience... Everyone shall be equal (at the bottom)... Equally misrable. We later found out that the people in charge of buying the food had been pocketing quite a bit of the money...

Mark

[FITZ]

I don't really envy anyone --- not the wealthy who worked for it either --- I've seen very wealthy lose their health at a relatively young age or some that seem to never have found happiness. I'm pretty happy with what I have, I don't really want what the very wealthy have for some reason. To me one of the nice things about being middle class is you can enjoy some wealth and enjoy some poverty.

[MarkL]

You say Marx made interesting points. What were they and why do you find them "interesting"?

I'd like to know too... When I was at SUNY @ Stony Brook, I needed a 300 level economics class, and the only class I could get into was Marxist Economics. Seriously, I really did try to read Das Kapital. I don't think that I got more than 10 pages into it... Most boring thing I tried to read since Sinclair Lewis' Babbit! I never did read it. Or anything by Marx. I kept falling asleep. I did read a lot about what Marx wrote though. I thought his whole take on "Dialectical Materialism" was flawed from the beginning, but maybe I just didn't understand the concepts. So, please, let me know what was "interesting" in Marx's philosophy.

Mark

[LowCountryJoe]

There's something about that "80% of the wealth being held by only 2% of the people" citation that just reeks of bullsh*t, after all 62% of the adult population own there own homes. But I'll play along with the citation. Let's suppose that those 62% of these home owners still are financing 80% [I'm starting to tire of the percentage game here] of their home values through their bank. And most of these owners are making the mortgage payments with a paycheck that provides 100% of the crap that they need to live on [notice I didn't write "...want to live on."].

Who do you suppose provided the capital necessary to fund the firm that provided the job in the first place?

Finally, who provide the Treasury with the money - that was so frugally managed with superb stewardship I might add - that allowed the United States of America to train and maintain the best military in the world. The very military that protects our sovereignty and the very same freedoms that allow you to express your "class envy".

In a round about, indirect way, you're biting the very hand that feeds you.

[raloxk]

Income inequality is the result of economic freedom

[Quix]

I may not win any friends among my Conservative peers hereon . . . but here goes.

I'm torn.

I believe the workman is worthy his hire. And, even people like rock stars, sports stars, software gurus etc. who churn out a product that benefits 10's to 100's of millions of people are due a portion of the cost each individual benefitting pays. I think that's a pretty solidly sound principle. Otherwise, why bother being creative. Be a well paid garbage collector or plumber and be done with a lot of other hassles.

On the other hand, 2% having 80% of the wealth seems extremely excessive.

And, in the New Testament, The Church had all things in common. God is not at all thrilled with our citizen's; western Society's; human nature's addiction to the gods of materialism. HE WILL BE INSURING WITHIN A RELATIVELY FEW YEARS THAT AUTHENTIC BELIEVERS ONCE AGAIN HAVE ALL THINGS IN COMMON in the USA. There will be no other viable way to handle the situations that will be arising.

And, after that horrid TRIBULATION, Christ's eternal Kingdom will clearly do things perfectly.

But to be more hypothetical as though I were rewriting the rules for our Republic at the outset . . . I think I'd try and get something like the following implemented.

---

1) Individuals who make 20-40 times the MEDIAN OF THE LOWER THIRD OF WAGE EARNERS would have 8 years of unfettered consumption at those rates of income.

The last 2 of those 8 years, a committe of a cross section of one's citizen peers of the most RESPECTED, HUMBLE, ALTRUISTIC OF THE CITIZENS IN THAT LOCALE AS DESCRIBED BY THE LOCAL POPULATION would examine the accounts and expenditures of the individuals concerned.

If there was a clear trend of spending at least 1/4th of said income in behalf of others and the public good, then said wealthy individuals would be allowed to continue to spend more or less unfettered with only yearly review for another 4 years.

After 4 years, the proportion of their income spent in behalf of the public good would have to go up to 35%. If it had gone up to 34% within the last year of those 4 years, the individual would be granted another 4 years of only yearly review.

At the end of that 4 years--16 years total--the proportion devoted to others and/or the public good would have to reach 55% within the last year of that 16th year. Then, another 4 years would be authorized with merely yearly review.

The last year of that 20th year, the individual would be required to demonstrate 70% of their income being devoted to others and/or the public good. If so, the individual would be authorized 10 years of additional unfettered spending at their own discretion with merely yearly review by their peers. Every decade thereafter until their death or dramatically less income [to be defined], they would have a review to asses whether they warranted by virtue of the wisdom of their impact on the public good, another 10 years of rather unfettered management of their own expenditures.

2) UPON THEIR DEATH, inheritance would pass as designated in their wills. Massive wealth could be inherited. However, the 3rd year after the inheritance was passed, a committee of peers would assess how wise the inheritee was using the wealth for his own life as well as for the public good. If the consensus was positive, the inheritee would be authorized another 5 years of relatively unfettered management of the wealth. At that point, the same process per above would apply.

---

3) Individuals who have income 40-60 times the MEDIAN of the LOWEST 3RD income group in the population at large would be allowed 5 years of unfettered management of their wealth with committee a review beginning the at the end of the 3rd year and also at the ending of the 4th and 5th years. At the end of the 5th year, if the consensus was positive, the individual would be allowed an additional 5 years of managing their own wealth unfettered.

At the end of every year following the end of the 10th year, a similar review would occur. Unbinding feedback would be given yearly. At the end of every 5th year until 15 years total, a positive consensus would be necessary for continued unfettered managment of their own wealth. During the 14th and 15th years, it must be demonstrated that they are beginning to insure that at least 30% of their income is devoted to others and/or the public good.

At the 19th and 20th years, it must be demonstrated that they are beginning to insure that at least 60% of their income is devoted to others and/or the public good.

At the end of the 24th and 25th years, and for every 5 year segment thereafter, it must be demonstrated that they are devoting 80% of their income to others and/or the public good.

Inheritance would be as above except that consensus required reviews would occur every 2 years for the first 10 years the inheritee managed the wealth. After that, the inheritee would be on the same program as the benefactor was before their death.

4) All those who's income was beyond 40% TIMES the MEDIAN income of the poorest 1/3rd of the population would undergo consensus required review every 2 years after an initial 5 years of unfettered management of their own wealth. And, they would have to devote 90% of their income to others and/or the public good after 20 years of income at the 40%+ level.

---

5) The peer review committee members would serve 16 years after which 1/4th would be rotated off every 4 years. Their income during years of service would be 3% of the incomes of all those they reviewed during the year. They would not have their expenditures reviewed except once at the half way point of their term and at the end of their term to insure there was no conflict-of-interest or other less than humble and altruistic management of their incomes.

Their deliberations would be highly classified. They would have a support staff chosen individually by them and that staff would also retire with them. The support staff would each receive 15% of the amount of income of the committee member they supported.

A monitoring mechanism and group--non permanent in terms of individual terms of duty--would be developed to insure that committee members and staff maintained the highest of morals and ethics at all times.

Taxes of the total population would be based on either a flat 15% tax or some fitting percentage OR a transaction tax.

Charitable and other public works organizations and projects would be open to contributions from all citizens, including the wealthy as outlined in general terms above.

Citizens amassing massive wealth would not be required to turn over major portions of it to a government bureaucracy which would inevitably manage it worse. Nevertheless, the opportunity to freely amass such wealth must at some point carry with it compelling pressure to apportion increasing amounts of it for the good of others and/or the public good.

Probably individuals skilled at amassing such wealth would be much better than government bureaucrats at insuring that genuine public good arose from their wealth.

---

anyway--so much for off the top of my head.

[LowCountryJoe]

...and am having to borrow $20,000/year to make my tuition payments...

It must be a loan from one of those damn 2%, the bastards!

[undeniable logic]

I actually don't know any ultra-wealthy people, but I do no hard work and I can only imagine the hard work required to become ultra-wealthy. I really think that it is unfair to ask for higher taxes or wealth distribution. Everyone makes a choice; a choice of a balance between leisure and hard work, investment in one's future and current satisfaction. I think it is unfair and quite frankly greedy of those who chose leisure and current satisfaction to demand compensation. Those who are wealthy paid a high price to achieve their goals, at least let them enjoy the rewards of their sacrifice. Not to mention, in the process of becoming wealthy, they have provided a tremendous service to our economy.

[MarkL]

Neal Boortz: "The rich will continue to do that which makes them rich and the poor will continue to do that which makes them poor".

I really like Neal... I once heard him talk about tax policy, and he stated that the poor should be taxed at a higher rate than the rich! Specifically, that those at the lower end of the income scale should be taxed at a higher rate than those at the upper ends of the scale. The "rich" would still pay more in taxes than the "poor," but at the same time, it would be incentive for the high income earners to earn more, since they get to keep more of their own money, and it would provide the lower income earners even greater incentive to earn more!

Mark

[aruanan]

What do people think about income inequality?

Income isn't something that, like air or water, exists in and of itself or that each and every person has some kind of equal claim so that if person A has twice the income of person B, person A must be preventing person B from getting his fair share. Income is a measure of a person's ability, skill, and productivity. You may as well ask what I think about ability inequality. If someone has the ability to create a multi-billion dollar business that provides employment and goods and services, then that person deserves every bit of the millions or billions of dollars he is able to generate for himself through that business. If another person has only the ability to work a forty hour week stocking shelves in that business, then he deserves no more income than what that level of labor will generate. Are their abilities and incomes unequal? Yes. Is the inequality unfair? No.

[OldBlondBabe]

"Many if not most of the richest individuals are in a similar situation. That being said, so what even if the income inequality is true to the extent you report? The wealth of the richest has been earned, if not by them, by their parents or grandparents. Their wealth is being used for research and development, paying employees, as monetary capital in the businessworld. It is also arguably the most efficient use of capital, because it is being controlled by those who are most successful."

Additionally, wealthy people finance the building of bridges, highways, schools, city buildings, libraries and other state and community projects by their investment in municipal bonds. This allows the borrowing communities to acquire financing at more attractive rates.

[White Eagle]

Live by statistics, join John Dean's campaign by statistics. All the numbers and percentages you quote about the US are quoted in a vacuum, with the assumption that this mix is unique to the US and not common elsewhere in the world.

Is that true?

[torchthemummy]

"America's middle class pays all the taxes, and pays for all of the kids to be born and raised, but cannot have any of its own, there are no funds left after taxes."

Check out #17. They are right on track. For more precise numbers, go to Rush Limbaugh's site to find the permanently-posted income earnings vs. income taxes (updated as necessary.)

And to poliscistudent -

1 - Germany's unemployment rate currently is hovering at 11%.

2 - Look who are the richest in the Congress and you will find more Dems than Repubs at the top and slightly above in the remainder. Guess what guy with the initials JFK is at the top.

3 - We have the fattest poor people in the world here.

4 - If taxes were not so high then everyone would have both more disposable income and would not necessarily have to have two income earners. Benefits - people would have more time to go from store to store instead of going to a place like Walmart with everything under one roof. A mother or father could stay home with their child, instill strong values as opposed to confusing values passed at daycare centers which, in themselves, cost about as much a week as a minimum wage job provides. With strong values at the beginning of life one has a better chance and a more optimist view on life which are essential ingredients later in life.

5 - Athletes, like CEO's, earn much more than the average worker. Ironically, in both cases, their saleries are provided by the consumer of their goods or services. Sure you could try to get enough people to organise and boycott but it never seems to get past the planning stages.

6 - Bill Gates, Warren Buffett, George Soros, etc were publicly against lowering the income tax on the top bracket. They sound like real humanitarians until you dig deeper. By putting alot of money in foundations, they avoid a good chunk of taxes, retain their wealth to pass down to their family, while almost exclusively supporting liberal causes which innoculates them against the mean/selfish rich moniker. At the same time high tax rates on the rich help eliminate up-and-coming rivals to their money and power.

7 - Progressive tax structures based on an ever-fluctuating "fair share" demands can never be satisfied because the "fair share" term is arbitrary and can never be honestly enumerated. The only fair tax is a flat-tax - say 20%. Make a million, pay $200,000. Make $100,000, pay $20,000 with minimal taxes (not elimanted - everyone needs to feel they are paying a share.) My conclusion on the best flat-tax system actually is consumer-based but either way would work better than the current scheme and would also force us to take on Social Security which is the biggest Ponzi Scheme ever devised.

I respect your curiosity and hope it is genuine.

[MarkL]

A number of posters have asked whether I think it's fair that the wealthiest people should pay the greatest share of taxes. Well, yeah, actually, I do. I mean, if the richest people in America own 80% of the total wealth, why wouldn't they be responsible for 80% of the taxes on that wealth? I don't see how that's unfair at all, that just seems like a straight dollar to dollar correlation to me.

Again, I think you're confusing terms... Do you mean "wealth" or "income?" Do you propose wealth taxes?

Mark

[FITZ]

[I'm starting to tire of the percentage game here]

I wonder what percent of the population owns their mansions outright --- to me the wealthy are those who don't have to work for a living but can live comfortably off their investments or inheritances. The middle class requires a paycheck --- most would have mortgages and may have little net worth --- but accumulates some wealth through the years by paying off their mortgages so an income wouldn't be needed after they retire. The poor don't work but live off the rest of us, they rely on government handouts to live a comfortable life of leisure.

[Dad was my hero]

I believe that the purpose of a national economy should be to provide the greatest good to the greatest number of the country's population. So, yeah, call me a socialist if you must, but if an economy reaches a level at which the vast majority of the rewards are going to a tiny fraction of the population, at the expense of the majority of the population, then, yes, I have a problem with it.

You're making some false assumptions to begin with. First of all, the economy is not the government's to own or tinker with. Economics itself is the study of the use of alternative resources which have alternative uses (*Thomas Sowell, Basic Economics p1). The things within the bounds of this economy all have alternative uses and the amounts that people set for their labor are based on their abilities to be useful to others.

Basically people's wages are established based on their worth to others. As a medical professional I have a worth to others in this society that commands so much money for minutes of my time. When someone graduates from high school with few skills, their worth to an employer is small. They can demand high wages but without a valid reason they will only get what value they can bring to an employer. If for instance the person is a young healthy strong male, he may only be worth $5.50 an hour to McDonald's because his skills are limited to grilling a hamburger, running the French fryer or filling a bag with the order. However at this time he may be worth $10.50 an hour to a roofer or some other construction company because he is young and strong. To a company looking for a manager to oversee their payroll department he is worth $0.00 because he has no background in that area.

You ask is there no degree of income inequality which would bother you? and I would answer NO! Payment for services is voluntary. People decide the worth of what someone does based on the scarcity of their skills and the demand for those same skills. If their skills are in demand but are also plentiful their value is less than if those skills are limited and in great demand. So the young strong guy will find more for his skills to move objects or do physical labor than would someone with a bad back and congestive heart failure. CEOs, professional athletes, actors, doctors and etc. have the ability to do things that few others can do. CEOs add wealth to companies which are owned by the wealthy and ordinary individuals. Professional athletes have the ability to perform at a physical level that surpasses others and provides many thousands of others with entertainment. Same for actors. Doctors can usually improve someone's health status.

This economy is made up of the millions of transactions that take place daily between individuals seeking to satisfy their needs, whether they are perceived or real needs is irrelevant. To alter what I decide is the worth of something or someone creates a weakness within the economy. It is no longer a free economy. Also to assume that you can wipe out poverty by artificially raising the bottom level (increasing the minimum wage) you only move the bottom up temporarily and once the economy readjusts those persons who you've claimed to help are no better off. And quite often many of them become unemployed in the interim.

Another fallacy is that there are a tremendous number of people out there making minimum wage trying to raise a family. The reality (read what Dr Thomas Sowell has written on the subject of minimum wages and statistics of who earns it -books and short essays) is that of those making hourly wages that would classify them as "living below the poverty level" 70% of them are kids, of the remaining 30%, about 80% of them are adults with second jobs picking up spare money. Of those remaining 6% most move out of that income level within a year as they acquire skills that make them more valuable to employers. Another thing that Dr Sowell has demonstrated using census bureau data is that poverty is not something that is lasting for most individuals within it. Statistics show that it appears we have a consistent percentage of the population living in poverty. However, it has been shown that those in poverty today will not likely be in poverty within 5 years and usually by the time they are ready to retire they have acquired financial security. Dr Sowell has shown that about 20% of those classified as living below the poverty line remain there for more than one decade. And that percentage decreases when viewed for two decades or more.

A final thought. Since president Johnson's war on poverty (initiated in 1964), the number of poor people has remained almost unchanged since 1959 (before the "war" began) through 2002 (39.5 million in 1959 and 31.1 million in 2002 *John Stossel, Give Me A Break p219). The percentage of the population in poverty was decreasing before the "war" began and has increased several times between 1964 and 2002. The greatest amount of wealth in the history of this world has been transferred from the middle and upper income classes to these "poor" and yet we see no end to this war in sight. If tomorrow by government fiat the minimum wage was set at $500 an hour so every person that worked a 2,000 hour year would now be a millionaire, within 12 months when the economy began to finally settle down, a loaf of bread, a gallon of milk and an automobile would be the same proportion of cost greater than a million dollar income then as they are above an $11,000 a year income today ($5.50 x 2,000 hours). And I would venture that you would hear the same people out there whining that it's impossible to raise a family on a million dollars a year, we need to raise the minimum wage.

[MarkL]

With respect to the uninsured, I managed to find a number for you. According to the US Census Bureau (http://www.census.gov/prod/2003pubs/p60-223.pdf for those of you who keep asking for links (-:), the number of uninsured in the US as of 2002 was 43.6 million, accounting for 15.2% of the population. Also worth mentioning, that figure is on the rise, up by 2.4 million people from the year before. C'mon, weaponeer, 1 out of every 6 people is not "statistically insignificant."

But I'm also curious about the peopel themselves who aren't insured: The demographics. I know that all the time I was in college and even after I got out, insurance was never something I (or any of my unmarried friends) ever gave a single thought to. I didn't think about it until the first time I got a job where health insurance was available. The simple fact is that there are an awful lot of people out there who could get insurance if they wanted it, but simply don't.

Mark

[Preech1]

Ping for potential Zotting in the future...just so I get in before things go weird.

[slohand]

To change the subject slightly. Liberals say that Bush is responsible for the economy starting from the day he was inaugurated. I believe you can tell how good a president was by how good the economy was after he left. By this grading Reagan was the best domestic pres ever. Athough bush 41 did put a dent in the economy with his tax increases the economy Clinton left has to be one of the worst